Ah, to be the owner of an indie TV studio.
Prices for the studios have been soaring this year as big media rushes to gain full control of hot TV shows.
Big media’s need for greater control of these properties will result this fall in a fresh wave of acquisitions in the indie TV sector, sources tell The Post.
The need for control is rising because big cable programmers are pushing to develop digital offerings with a variety of distributors and need as much exclusive must-see content as possible.
Such programmers are also watching carefully as a growing number of producers are taking their work directly to SVOD players such as Netflix, Hulu and Amazon and over-the-top networks become a bigger threat to traditional viewing.
[The indie TV ] sector used to be considered the least attractive part of the TV industry, but has been gaining in popularity. We’re seeing multiples paid in some cases as high as 11 to 12 times ebitda.
- Berenson & Co. banker Lisbeth Barron
Hot indie studios catching the attention of big media, sources said, include: Bray Entertainment; T Group, which makes “Swamp Hunters” for TruTV; and Ping Pong Productions, which made “Hacking the System” for National Geographic Channel.
Outside the US, Zodiak Media, Banijay Group, and Red Arrow Entertainment Group are being eyed for deals, these sources noted.
These firms aren’t just tiny cottage industries but rather mammoth entertainment groups housing scores of video assets.
“Since March, we’ve seen 10 deals that are over a multiple of 10x earnings before tax, depreciation and amortization,” said Berenson & Co. banker Lisbeth Barron, an authority on the indie TV sector.
“It’s a very unusual trend line that hasn’t been seen in many years — that used to be what you’d see for feature film libraries.”
Barron has collected data on indie multiples going back 30 years and just released a guide to the sector titled “The Future of TV.”
There is a shift in acquisition money to TV assets and away from film because TV is more resilient longer term, Barron said. And reality TV is the hottest category of all.
“That sector used to be considered the least attractive part of the TV industry, but has been gaining in popularity,” Barron said. “We’re seeing multiples paid in some cases as high as 11 to 12 times ebitda.”
“Not only are European buyers showing strength, but Chinese buyers are paying more than 20 times for television assets that are exported beyond just the Chinese market,” she added.
A smaller trend is also bending toward studios producing TV dramas, said Stephen Prough, co-founder of Salem Partners. “Not a lot of scripted [drama-based] companies have traded.”
The independent reality companies got to critical mass before scripted and now we’re just seeing their emergence.”
The landgrab has been in overdrive this past few months, with a major sea change in valuations occurring after British broadcaster ITV acquired Leftfield Entertainment in May. Leftfield produces “Real Housewives of New Jersey.”
Discovery Communications was one of the first media companies to begin snapping up big production houses such as ‘Gold Rush’ maker Raw in March and All3Media in May.
In July, the Weinstein Co. said it was looking at future options for its own TV production venture with one possibility spinning off the TV arm and another partnering with an online player such as Yahoo! or Netflix.